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nursing homes

Author

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  • Edward C. Norton

Abstract

Nursing homes are healthcare providers for persons, often elderly, who need assistance living with chronic illness. This article describes the main economic issues of supply and demand for nursing home care, including quality of care and long-term care insurance.Nursing home care is an important area for health economics because it represents the largest share of long-term care expenditure. The potential for needing nursing home care affects economic decisions for individuals over a lifetime and across generations (Norton, 2000). For example, an elderly widow anticipating a need for long-term care may decrease her savings or increase her bequests to qualify for means-tested public insurance, or may demand informal care from a working daughter, even though she ultimately never enters a nursing home.Long-term care differs from acute medical care in four fundamental ways (Norton, 2000). First, long-term care is care for chronic illness or disability instead of treatment of an acute illness. Medical expenses accumulate unrelentingly. Second, the nursing home industry is dominated by for-profit facilities sometimes facing excess demand, in contrast to the hospital industry which is dominated by non-profit facilities with an excess supply of beds. Third, nursing homes have many close substitutes, including informal care. Informal care may affect the caregiver's labour supply or may influence bequests, if such bequests are used to elicit attention and informal caregiving by children. Fourth, in contrast to relatively comprehensive acute care insurance for elderly, few people purchase private long-term care insurance and most public insurance is means-tested, with high co-payments. Thus, long-term care is usually the greatest out-of-pocket expenditure risk faced by the elderly.This article summarises the theoretical and empirical economic research on nursing homes and long-term care. In addition to discussing supply and demand, particular attention is focused on quality of care and the market for long-term care insurance.

Suggested Citation

  • Edward C. Norton, 2013. "nursing homes," The New Palgrave Dictionary of Economics,, Palgrave Macmillan.
    • Handle: RePEc:pal:dofeco:v:7:year:2013:doi:3902
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    Citations

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    Cited by:

    1. Angel López Nicolás, 2002. "How important are tobacco prices in the propensity to start and quit smoking? An analysis of smoking histories from the Spanish National Health Survey," Health Economics, John Wiley & Sons, Ltd., vol. 11(6), pages 521-535, September.
    2. Bridget Hiedemann & Michelle Sovinsky & Steven Stern, 2018. "Will You Still Want Me Tomorrow?: The Dynamics of Families’ Long-Term Care Arrangements," Journal of Human Resources, University of Wisconsin Press, vol. 53(3), pages 663-716.
    3. Grabowski, David C. & Afendulis, Christopher C. & McGuire, Thomas G., 2011. "Medicare prospective payment and the volume and intensity of skilled nursing facility services," Journal of Health Economics, Elsevier, vol. 30(4), pages 675-684, July.
    4. Aaron J. Sojourner & Brigham R. Frandsen & Robert J. Town & David C. Grabowski & Min M. Chen, 2015. "Impacts of Unionization on Quality and Productivity," ILR Review, Cornell University, ILR School, vol. 68(4), pages 771-806, August.
    5. Kristin J. Kleinjans & Jinkook Lee, 2006. "The link between individual expectations and savings: Do nursing home expectations matter?," Economics Working Papers 2006-05, Department of Economics and Business Economics, Aarhus University.
    6. R. Konetzka & Edward Norton & Sally Stearns, 2006. "Medicare payment changes and nursing home quality: effects on long-stay residents," International Journal of Health Economics and Management, Springer, vol. 6(3), pages 173-189, September.
    7. M. M. Shoukri & M. Attanasio & J. M. Sargeant, 1998. "Parametric versus semi-parametric models for the analysis of correlated survival data: A case study in veterinary epidemiology," Journal of Applied Statistics, Taylor & Francis Journals, vol. 25(3), pages 357-374.

    More about this item

    Keywords

    aging; assisted living; chronic care; elderly; informal care; insurance; long-term care; nursing homes;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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